Winklevoss Twins Hire Nasdaq to Watch for Crypto Cheaters


via Bloomberg

  • Their Gemini market to use Nasdaq market surveillance service
  • Investors have wondered who’s watching out for crypto fraud

The Winklevoss twins brought in the pros to keep cheaters off their cryptocurrency exchange.

Their company, Gemini Trust Co., hired Nasdaq Inc. to conduct market surveillance for Bitcoin and Ether trading as well as the auction that helps price Cboe Global Markets Inc.’s Bitcoin futures, according to a statement Wednesday. It’s the first partnership between a well-known exchange like Nasdaq and a digital-asset market to help safeguard the nascent $433 billion cryptocurrency sector.

The deal could reassure investors of the reliability of New York-based Gemini, operator of one of the largest U.S.-based cryptocurrency exchanges. Practices like spoofing – a form of cheating that regulators have spent years stamping out in futures and equities markets – have fueled concerns about whether crypto trading is adequately monitored.

Nasdaq’s surveillance “is tried and true technology that’s used by some of the largest exchanges in the world, so it’s an obvious fit,” Cameron Winklevoss said in a telephone interview. “We love rules-based markets when the playing field is clear and straightforward and there’s transparency.”

One of Gemini’s rivals said earlier this week that crypto traders don’t care about whether markets are abused. San Francisco-based Kraken said on its blog that “being protected from market manipulation” doesn’t matter to most crypto traders. Last week, Kraken rebuffed an attempt by the New York State Attorney General Eric Schneiderman to gather information about how digital asset exchanges operate. Trading on Kraken helps value CME’s Bitcoin futures contracts.

Cameron and his brother, Tyler Winklevoss, founded Gemini in 2015. Cameron said that Gemini for now is satisfied with its own matching engine technology – the software that pairs buyers and sellers – another service Nasdaq provides to markets around the world.

“We’ll always be looking at other options but we have no immediate plans” to outsource that core trading function, he said.

Cameron Winklevoss said that policing markets should be required as the industry matures. “We don’t want to be the only player with a market-surveillance program,” he said.

Famous for running its namesake stock exchange, Nasdaq has for years sought to also capitalize on its expertise in surveillance and trading technology. Nasdaq said its Smarts surveillance system “automates the detection, investigation and analysis of potentially abusive or disorderly trading,” and is used by more than 45 markets and 17 regulators.

Nasdaq provides surveillance, trading and clearing services to other cryptocurrency exchanges besides Gemini, Chief Executive Officer Adena Friedman said in an interview Wednesday, declining to identify them. As for Gemini, “the fact that they’re choosing to work with us is a testament to them and the quality of what we provide,” she said.

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Something about hearing they have hired people to watch their customers makes me not want to use their exchange - not sure why.

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I like how their eyes are closed. Shows they are gurus.

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LOLOLOLOL wow best troll today…how pissed will these guys be when they get rekt by Zuck v.2 On a serious note this is all about SRO and perhaps the Winkelvii are the right face for regulation.

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In Nasdaq’s own words, the SMARTS technology ‘automates the detection, investigation and analysis of potentially abusive or disorderly trading’ allowing for administrative staff to shut down and report any malicious behavior. It is widely used on stock and Forex trading platforms and is trusted on an industry level. It can be used to discover market manipulations, some forms of money laundering, and various other criminal activities.

In a statement, Cameron Winklevoss, one of the founders of Gemini, wrote that ‘adding trade surveillance technology is the most recent development in our efforts to build a rules-based marketplace.’ While many other exchanges such as Binance and Coinbase have been focusing on growing their platforms and providing more coins to trade, Gemini has been working hard to refine theirs and make their trading pairs as robust and futureproof as possible. This is another step towards Gemini becoming a ‘market leader in custom surveillance rule creation and alerting for the crypto-asset market.’

A focus on surveillance in regards to cryptocurrency is necessary if the industry wants to be taken seriously by Wall Street— many financial news outlets still regularly publish content which conveys Bitcoin as synonymous with criminal behavior. The decision to work with Nasdaq to remove this title reveals to the public just how seriously exchanges like Gemini take illegal activity and gently reminds the public that cryptocurrency’s underlying value does not come from criminal activity but rather from its immutability and its decentralisation.

Originally published at cryptodisrupt.com

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make sure you’re searching for existing threads please…

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I wonder how much of this technology is needed/required on DEXes? Surely building DEX’s on a blockchain can almost eliminate this entirely from the exchange.

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Im liking this…all good stuff. For me exchanges hold the keys to Crypto adoption for the masses…
DEX need to be simple and proven, Certainy Fiat into exchanges and great charting platforms will be the catalyst for retail traders to pile in. Be awesome to see top 20 crypto fiat pairs…

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